I.Introduction
In 1992, whereas Hewlett Packard (HP) realized a huge success with its RISC-based products, Manuel Diaz, head of HP's Computer Systems Organization (CSO), implemented a new sales approach to capitalise on the company's new market position. In 1994, the strategy turned out to be very profitable as HP's business grew by 40% when the industry-wide growth was just 5%.
In 1996, Diaz notices that its strategy to reach large enterprises could be refined. Indeed, HP remains stuck on the downstream and middle stream businesses of this market segment. At the same time, content value providers and solution-providers position themselves on the highly profitable upstream business. In parallel, Diaz looks for new ways of developing the
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Due to a decline in national (USA) spending and overcapacity CSO evolved into a global supplier of information appliances and solutions.
HP's core competency resided in the technological features of their products and a price/performance advantage in hardware supply. Additionally, the level of trust and confidence that IT customers placed on HP positioned their brand as a trusted hardware supplier.
B.Customers
CSO's customers are segmented into large (enterprise), small-medium (SME), and individual. Customers in the largest segment typically spent between $0.5m~ $200m of their annual multi-million IT budgets with HP. The top 5% of customers in this segment accounted for over 40% of CSO's sales. These customers frequently placed daily orders and consumed over 65% of sales force, which served them directly, total productive time.
Customers in the SME segment typically budgeted less than $0.25m for annual IT spending. A combination of sales reps and channel partners served this segment. Individual customers were serviced exclusively by indirect retail channels.
Considering the volume of sales generated by enterprise customers HP pondered the similarities and differences between the top enterprise customers in deciding whether to offer a standard product offering, customization, or an optimal mix designed to be able to benefit from cost reductions, stability, and improved profitability.
C.Order Qualifiers and Winners
Enterprise
In this way, both the individual consumer and the business customer have the same basic factors motivating their decision, but with very different reasons for doing so. By looking at the customer analysis, it is apparent how Enterprise has tailored its services to satisfy the needs of the consumers.
Jeff Hawkins founded Palm Computing Inc, a hand-held computer business, in 1992 which has since changed names (Yoffie & Kwak, 2001). In 1999 it changed to Palm Inc (Yahoo Finance, 2006). The case study concentrated on Jeff Hawkins, the founder of Palm, and Donna Dubinsky the former CEO of the company. These two left Palm in 1998 and founded a company called Handspring, the only company as of 2001 to take a meaningful share of the market away from Palm (Yoffie, 2001). Currently the CEO at Palm, Inc is Edward T. Colligan. For the period ending May 31, 2006, Palm had sales of $1.578 billion and a net income in excess of $336 million (Yahoo Finance, 2006). This is a significant increase over the
Changing Market Conditions In the early 1990's, while technological innovation continued to drive the company's success, many business units were being forced to compete on other dimensions. In consumer product lines, low prices, broad availability and ease of use had become competitive requirements. Lew Platt, HP's current President and Chief Executive Officer, once acknowledged the importance of improving customer service and responsiveness, We're not doing as good a job in order fulfillment as we need to. In fact, it's where we get our lowest marks from customers. We have to be a lot easier to do business with. Improvement in order fulfillment will strengthen HP's competitiveness, increase customer satisfaction and reduce expenses, so this is an
All of these technological advances by HP receive the attention of Japan and China where HP expanded in hopes of continuing to invent newer and better technologies in the future. Since the 90’s HP has gone on to invent many other firsts like the first all-in-one device and is the first company to recycle ink cartridges. They have also acquired many smaller companies like Snapfish and Compaq to grow the company to being one of the industry leaders in personal computing. (Hewlett-Packard, 2013).
Hewlett Packard is about extending beyond the limits of classical physics and provides a quantum leap in performance, reliability and security. With the ever changing world of technology and the high demand to stay ahead of the curve, HP Labs is inventing today and for the next generation a new line of HP products and solutions. HP focuses on partnering with you, the visionary customer by solving your enterprise issues. HP has the scale, ideas, expertise and unmatched portfolio of products and services to deliver end-to-end innovation and value. We believe diversity is a key driver of our success. Putting all our differences to work across the world is a continuous journey fueled by personal leadership from everyone in our company.
Computer services: the firm evaluated it as a modified profit center, which they called a “breakeven” center.
HP, an expert in the hi-tech industry understands the fiercely competitive environment where technological and innovative advancements could create turbulent
The PC group within HP PPS has been refocused around customer needs. The PC group changed its product line which had a stronger focus on product design. New business models have been the focus of the print group. Business models such as Ink Advantage, is a program designed to target price-sensitive customers in emerging markets. Ink in the Office is an initiative of the print group that targets business customers. The group has expanded differentiated services and solutions by leveraging HP's portfolio of hardware and software, including combining multifunction printers with Autonomy management solutions to develop cloud-based document management services (HP,
Comments: * 2.a) Financial ratios were calculated in the appendix but limited consideration was given to industry trends and benchmarks. To improve the response to an ME, ensure to include a discussion of relevant benchmarks and trends and leverage in the analysis of the alternatives. * 2.b) Some consideration was given to key decision analysis concepts and tools listed in this component (profitability, customer mix analysis) but overall the component can be improved. To improve the response to an ME, consider using additional tools such as a sensitivity analysis when considering the impact of different scenarios for the customer mix segments to target.
As a start-up in a very competitive industry, Club IT has to concentrate on delivering consistently excellent customer experiences that are memorable and differentiated enough to bring customers back again and again. Choosing a customer orientation strategy will make this achievable, and will also serve to unify the diverse technology, system, process and procedural decisions the founders must make in order to gain the full value of their IT investments. Technologies and systems need to be used to bring customers to the very center of their business model. Accounting and finance, supply chain management, talent management, and especially promotional, marketing and customer relationship management (CRM) systems all must be orientated to making each customers; experience memorable and differentiated from the many other clubs in the area.
We knew that while making our product we had to keep in mind that different type of customers wanted different things all depending on how much they were willing to spend on the product. For example, Our Workhorse demanded more Easy to use, Low price, has a distinct look, able to store a lot of data, After-sale service and support, can link with other computers, Fast and powerful. They needed something reliable and less expensive since they are the hardworking people that don not have too much money to spend The chart here explains a little better on the Workhorse needs and want. The price that the workhorse was willing to pay for the product was 2,500.
By the late 1990s, HP’s business was facing major problems which are reflected in its financial results. Despite a 9.71% increase in total net revenue, HP faced declining net earnings of 6% from 1997 to 1998. The company had also experienced a slow and decreasing growth in revenue in comparison to its main competitors. From 1996 to 1998, HP’s annual revenue growth decreased from 21.89% to 9.71%, while one of its main rivals, Dell, was able to maintain an over-40% revenue growth in each year within the same period. Moreover, HP’s failure to satisfy customer needs and catch
The changes that Dudley recommends are intelligent in that he recognizes the importance of the technological environments on the company’s success. By focusing on innovation and upstream selling HP will be able to make more technological advancements. They need to ear top management respect and not be limited or they will become followers rather than leaders in the industry. Also the employees are the most important ingredient in the recipe to a successful organization. If the HP salespeople are not satisfied their attitude will begin to affect their performance on which the entire HP company’s success hinders upon. It is evident through Dudley’s audit that HP employees are not satisfies and feel they are being overworked and stretched to their limits. The fact that they are consciously ignoring opportunities because it would take too much time away from existing relationships is an issue that will eventually lead to the demise of the organization. If HP does not act on Dudley’s recommendations for the restructuring of the sales strategy and force HP could begin to fade as industry leader.
S: 1. Product diversity: HP not just do the software and hardware but the whole rang of service to design, implement and IT infrastructure. Right now HP is dominating the market of printer with 40% market share. The product diversity enables the company to hold its position even in the time of recession.
Page eight of the case begins to outline some of the challenges that the HP-Cisco alliance had already faced concerning the sale of joint products. For example, we learn that at HP, Cisco products did not count towards a sales representative’s quota and this resulted in a decline in sales of Cisco equipment by HP sales representatives. Further, if HP or Cisco sales staff had to master not only their parent company product line,